EMX ROYALTY CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS ENDED MARCH 31, 2022
GENERAL
This Management's Discussion and Analysis ("MD&A") for EMX Royalty Corporation, (the "Company", or "EMX") has been prepared based on information known to management as of May 12, 2022. This MD&A is intended to help the reader understand the consolidated financial statements and should be read in conjunction with the consolidated financial statements of the Company for the three months ended March 31, 2022 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All dollar amounts included therein and in the following MD&A are in Canadian dollars except where noted.
Readers are cautioned that the MD&A contains forward-looking statements and that actual events may vary from management's expectations. Readers are encouraged to read the "Forward-Looking Information and Cautionary Statement" at the end of this MD&A. Additional information related to the Company, including our Annual Information Form and Form 40-F, are available on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov, respectively. These documents contain descriptions of certain of EMX's producing royalties as well as summaries of the Company's advanced royalties and royalty generation assets. For additional information, please see our website at www.emxroyalty.com.
OVERVIEW
EMX Royalty Corporation is in the business of organically generating royalties derived from a portfolio of mineral property interests. The Company augments royalty generation with royalty acquisitions and strategic investments. EMX's royalty and mineral property portfolio consists of over 272 properties in North America, Europe, Turkey, Latin America and Australia. The Company's portfolio is comprised of the following:
Producing Royalties | 5 |
Advanced Royalties | 9 |
Exploration Royalties | 155 |
Royalty Generation Properties | 103 |
The Company's common shares are listed on the TSX Venture Exchange and the NYSE American Exchange under the symbol "EMX", as well as on the Frankfurt Stock Exchange under the symbol "6E9".
STRATEGY
EMX's strategy is to provide our shareholders and other stakeholders exposure to exploration success and commodity upside through successful implementation of our royalty business. The Company believes in having a strong, balanced exposure to precious and base metals with an emphasis on gold and copper. The three key components of the Company's business strategy are summarized as:
- Royalty Generation. EMX's 18-year track record of successful exploration initiatives has developed into an avenue to organically generate mineral property royalty interests. The strategy is to leverage in-country geologic expertise to acquire prospective properties on open ground, and to build value through low-cost work programs and targeting. These properties are sold or optioned to partner companies for retained royalty interests, advance minimum royalty ("AMR") and annual advance royalty ("AAR") payments, project milestone payments, and other consideration that may include equity interests. Pre-production payments provide early-stage cash flows to EMX, while the operating companies build value through exploration and development. EMX participates in project upside optionality at no additional cost, with the potential for future royalty payments upon the commencement of production.
- Royalty Acquisition. The purchase of royalty interests allows EMX to acquire assets that range from producing mines to development projects. In conjunction with the acquisition of producing and pre-production royalties in the base metals, precious metals, and battery metals sectors, the Company will also consider other cash flowing royalty acquisition opportunities including the energy sector.
- Strategic Investment. An important complement to EMX's royalty generation and royalty acquisition initiatives comes primarily from strategic equity investments in companies with under-valued mineral assets that have upside exploration or development potential. Exit strategies can include equity sales, royalty positions, or a combination of both.
EMX has a combination of producing royalties, advanced royalty projects and early-stage exploration royalty properties providing shareholder's exposure to immediate cash flow, near-term development of mines, and long-term exposure to world class discoveries. Unlike other royalty companies, EMX has focused a significant portion of its expertise and capital toward organically generating royalties. We believe putting people on the ground generating ideas and partnering with major and junior companies is where EMX can generate the highest return for our shareholders. This diversified approach towards the royalty business provides a foundation for supporting EMX's growth and increasing shareholder value over the long term.
HIGHLIGHTS
Financial Updates for the Three Months Ended March 31, 2022
- Adjusted revenue and other income1 of $3,369,000 included $1,154,000 in income from the effective Caserones copper royalty interest in Chile.
- Royalty generation costs of $5,397,000 of which the Company recovered $2,695,000 from partners.
- General and administrative costs totaled $2,688,000. Impacting general and administrative costs, were higher professional fees, relating to the Barrick settlement of the Bullion Monarch litigation in the US, as well as the payment or accrual of annual compensation awards and adjustments.
- Share-based payments totaled $626,000 compared to $542,000 in Q1-2021. The aggregate share-based payments relate mainly to the fair value of restricted share units ("RSUs") vested during the period.
- Finance expenses of $1,787,000 associated with the Sprott Credit Facility and the SSR VTB note. The Company also recognized a gain on modification of the Sprott Credit Facility of $5,008,000 resulting from an extension of the maturity date.
- For the quarter, the Company had a loss from operations of $4,427,000 and net income of $23,547,000.
- Adjusted cash provided by operating activities1 of $20,928,000.
- Other significant items affecting income for the three months ended March 31, 2022 included $23,846,000 of net proceeds received (after settlement of legal fees) relating to the Barrick settlement with Bullion Monarch, unrealized fair value gains on investments of $6,329,000, deferred income tax expense of $5,339,000, and foreign exchange adjustments of $1,038,000.
- As at March 31, 2022, the Company had cash and cash equivalents of $44,970,000, investments, long-term investments and loans receivable valued at $30,511,000, and loans payable of $59,226,000.
_________________________________
1 Adjusted revenue and other income, and adjusted cash provided by (used in) operating activities are non-IFRS financial measures with no standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-IFRS financial measures" section on page 20 of this MD&A for more information on each non-IFRS financial measure.
Corporate Updates
Suspension of Filing of Notice of Arbitration
EMX suspended the filing of its Notice of Arbitration to Zijin Mining Group Ltd ("Zijin") and commenced discussions with Zijin with the goal of reaching a mutually acceptable resolution.
Settlement of the Bullion Litigation
The Company's wholly-owned subsidiary, Bullion Monarch Mining, Inc., ("Bullion") reached a settlement with Barrick Gold Corporation ("Barrick") and Barrick affiliates and subsidiaries ("Barrick Entities") with respect to Bullion's claim of non-payment of royalties by the Barrick Entities to Bullion on production from properties in the Carlin Trend, Nevada. Bullion initiated litigation in 2008, before EMX acquired Bullion in 2012. Pursuant to the settlement, Barrick paid Bullion US$25 million. Of the US$25 million settlement, US$6.175 million was paid as a fee to Bullion's Reno, Nevada lawyers. The settlement of the lawsuit does not affect our 1% gross smelter return royalty from portions of Nevada Gold Mine's Leeville, Carlin East, Four Corners, and other northern Carlin Trend underground gold mining operations (the "Leeville Royalty"), which will continue to be paid.
Acquisition of Additional Royalty Interest on Caserones
Subsequent to Q1, EMX acquired an additional (effective) 0.3155% Net Smelter Return ("NSR") royalty on the Caserones Copper-Molybdenum Mine located in northern Chile for US$25.74 million. When combined with EMX's (effective) 0.418% NSR interest acquired in August 2021 (see EMX news release dated August 17, 2021), EMX now holds an effective 0.7335% NSR royalty.
Impact of Covid 19
EMX continues to monitor developments regarding the ongoing coronavirus pandemic ("COVID-19"), with a focus on the jurisdictions in which the Company operates. EMX has implemented COVID-19 prevention, monitoring and response plans following the guidelines of international agencies and the governments and regulatory agencies of each country in which it operates. EMX's priority is to safeguard the health and safety of its personnel and host communities, support government actions to slow the spread of COVID-19 and assess and mitigate the risks to business continuity.
Royalty Generation Updates
During Q1 of 2022, the Company's royalty generation business was active in North America, South America, Europe, Turkey, and Australia. The Company spent $5,397,000 and recovered $2,695,000 from partners. During the quarter the Company also completed 3 partnerships across the portfolio all the while continuing to replace partnered properties with new mineral properties.
Highlights from Q1 2022 include the following:
- In the US the Company added to its growing royalty portfolio with the completion of two new royalty agreements, the advancement of eight partner-funded work programs, including ongoing drill projects, and new generative work leading to new acquisitions.
- In Canada, partners continued to advance the portfolio with multiple field programs, including drill programs, while EMX received $89,000 in cash payments and $Nil share equity payments.
- EMX continued to expand its asset portfolio in Fennoscandia with the generation of several additional exploration properties. Nickel and other battery metals continue to be a focus of the Fennoscandia operations.
- EMX's South American royalty portfolio advanced through drill programs conducted by AbraSilver Resource Corp. Aftermath Silver Ltd, Austral Gold Ltd., and Pampa Metals Corp.
- In Australia, partner Many Peaks Gold achieved a public listing on the Australian Securities Exchange ("ASX") and commenced drilling at the Company's Queensland Gold project with results anticipated in Q2. As per the option agreement and in connection with the initial public offering, Many Peaks Gold Pty Ltd. issued to the Company 1,175,000 shares valued at $215,000 as an option fee.
- At the end of Q1, 2022, technical reports were filed for EMX's Caserones Copper-Molybdenum Mine Royalty in Chile, EMX's Gediktepe Polymetallic Deposit Royalties in Turkey and for EMX's Timok Royalty in Serbia that covers the newly commissioned Cukaru Peki Copper and Gold Mine.
Financing Updates
Sprott Credit Facility
The Company entered into a credit facility in Q3 of 2021 with Sprott Private Resource Lending II (Collector), LP ("Sprott") totaling US$44 million (the "Credit Facility"). On January 24, 2022, the Company signed a credit agreement modification extending the maturity date to December 31, 2024. In connection with the extension, an additional 1.50% of the principal (US $660,000) was added to the principal balance as at January 24, 2022.
Private Placement with Franco-Nevada
Subsequent to Q1, the Company completed a $12,580,000 (US$10,000,000) private placement with Franco-Nevada Corporation ("Franco-Nevada"). The proceeds were used to acquire the additional (effective) NSR on the Caserones open pit mine in northern Chile (see EMX's news release dated April 14, 2022).
Franco-Nevada purchased 3,812,121 units at $3.30 per unit. Each unit consisted of one common share of EMX and one warrant to purchase one common share of EMX for $4.45 exercisable until April 14, 2027. The shares issued upon closing and the shares issuable upon the exercise of the warrants will be subject to a four-month restricted resale (hold) period expiring August 15, 2022. Franco-Nevada now owns approximately 3.5% of the issued and outstanding shares of EMX on an undiluted basis.
Investment Updates
As at March 31, 2022, the Company had investments totaling $28,010,000 which included $22,808,000 in various public and private entities, and $5,202,000 in non-current investments. The Company will continue to generate cash flow by selling certain of its investments when appropriate. Much of the investment portfolio was derived from royalty deals completed as part of our organic royalty generation business.
Strategic Investment in Premium Nickel Resources
Subsequent to Q1, the Company completed a strategic investment in Premium Nickel Resources Corporation ("PNR"), a private Canadian company advancing nickel-copper-cobalt and platinum group element ("PGE") projects in Botswana. EMX now owns 5,412,702 shares or 6.3% of the issued and outstanding shares of PNR having purchased an additional one million shares in April 2022. This purchase was part of a recent financing completed by PNR at US$2.00 per share.
PNR recently acquired the Selebi and Selebi North nickel-copper-cobalt mines and signed an asset purchase agreement to acquire the Selkirk nickel-copper-cobalt-PGE mine, which are located in Botswana's prolific Selebi-Phikwe and Tati nickel mining districts. In February 2022, PNR announced the signing of a non-binding letter of intent providing for a business combination with North American Nickel, which trades on the TSX-V (NAN), as a path to go public.
OUTLOOK
The year 2022 will see an increase in revenue and other income coming from our cash flowing royalties including Caserones in Chile, Leeville in Nevada, and potentially Timok in Serbia (pending conclusion of the royalty rate discussions with Zijin). Likewise, Gediktepe and Balya in Turkey have been commissioned and are scheduled to contribute to 2022 cash flows. As in previous years, production royalties will continue to be complemented by option, advance royalty, and other pre-production payments from partnered projects across the global asset portfolio. The Company plans to give production guidance for 2022 later this year.
Subsequent to Q1, EMX acquired an additional (effective) 0.3155% royalty interest on Caserones and completed a $12,580,000 (US $10,000,000) private placement Franco-Nevada and a strategic investment in PNR.
The Company will continue to strengthen its balance sheet over the course of the year by looking to retire portions of our long-term debt, continuing to evaluate equity markets (including the filing of a shelf prospectus), and the ongoing monetization of the Company's marketable securities.
EMX is well funded to identify new royalty and investment opportunities, while further filling a pipeline of royalty generation properties that provide opportunities for additional cash flow, as well as exploration, development, and production success.
ROYALTY PORTFOLIO REVIEW
EMX's royalty and royalty generation portfolio totals over 272 projects on five continents. The following is a summary of the royalty portfolio that includes producing, advanced, and exploration project royalties. There are three material royalties covering the Gediktepe Mine in Turkey, the Timok Mine in Serbia, and the Caserones Mine in Chile. EMX has filed technical reports for Gediktepe, Timok, and Caserones that are available under the Company's issuer profile on SEDAR (www.sedar.com). In addition, the Leeville and Balya royalty properties are important to the Company, for current as well as projected future royalty cash flows, respectively.
Appendix A includes a comprehensive table of EMX's royalty assets. Please see EMX's Annual Information Form for the year ended December 31, 2021 for a summary of resource and reserve statements for key royalty assets. For additional details on EMX's royalty and royalty generation portfolio, including specifics on the royalty terms, please refer to the Company's website (www.EMXroyalty.com) as well as the Company's financial statements for the year ended December 31, 2021.
Producing Royalties
Asset | Location | Operator | Commodity | Stage | Royalty Interest |
Caserones | Chile | JX Nippon Mining & Metals | Copper (Molybdenum) | Producing | Effective 0.7335% NSR |
Timok | Serbia | Zijin Mining Group Co, Ltd. | Copper-Gold | Producing | 0.5% NSR |
Leeville | USA | Nevada Gold Mines LLC | Gold | Producing | 1.0% GSR |
Gediktepe | Turkey | Lidya Madencilik Anayi ve Ticaret A.S. | Gold, Polymetallic | Oxide phase commissioned - initial production | 10% NSR on oxide zone and 2% NSR on sulfide zone |
Balya | Turkey | Esan Eczacibaşi Endüstriyel Hammaddeler San. ve Tic. A.Ş. | Zinc-Lead-Silver | Development - initial production | 4.0% NSR |
Significant Updates
Caserones, Chile - The Caserones open pit mine ("Caserones") is developed on a porphyry copper (molybdenum) deposit in the Atacama Region of Chile's Andean Cordillera. The mine is operated by SCM Minera Lumina Copper Chile SpA, which is 100% indirectly owned by JX Nippon Mining & Metals Corporation ("JX Nippon"). Caserones produces copper and molybdenum concentrates from a conventional crusher and mill and flotation plant, as well as copper cathodes from a dump leach and solvent extraction and electrowinning plant. In 2020 the mine produced 104,917 tonnes of fine copper in concentrate, 2,453 tonnes of fine molybdenum in concentrate, and 22,056 tonnes of fine copper in cathodes (JX Nippon's year-end 2021 reporting is pending).
Subsequent to Q1 2022, EMX announced the acquisition of an additional 0.3155% NSR on Caserones for a purchase price of US$25.74 million (see EMX news release dated April 14, 2022). When combined with EMX's previously acquired 0.418% NSR, EMX now controls an effective 0.7335% NSR. As part of the additional royalty purchase, EMX also announced completion of a private placement with Franco-Nevada Corporation for $12,580,000 million (see EMX news release dated April 14, 2022).
Timok, Serbia - EMX's Timok Royalty is located in the Bor Mining District of Serbia and covers the Cukaru Peki copper-gold deposits. Cukaru Peki consists of a high-level body of high-grade, epithermal-style copper-gold mineralization referred to as the "Upper Zone", and a deeper body of porphyry-style copper-gold mineralization known as the "Lower Zone". EMX's Timok Royalty covering Cukaru Peki is stated to be a 0.5% NSR in the royalty agreement. The royalty agreement contains a provision for the reduction of the royalty rate under certain circumstances, but EMX does not believe that those conditions have been satisfied. The Timok project is currently owned and operated by Zijin Mining Group Ltd ("Zijin").
Production from the Upper Zone of Cukaru Peki commenced in Q4 2021, and EMX announced its intent to seek arbitration to resolve the issue about the royalty rate on the project (see EMX news release dated December 17, 2021). Amicable discussions with Zijin commenced shortly after EMX's announcement, leading EMX to suspend plans to file a notice of arbitration (see Company news release dated January 27, 2022). Discussions between EMX and Zijin continued in Q1 as both companies continue to work toward finding an amicable solution.
Leeville, Nevada - The Leeville 1% gross smelter return ("GSR") royalty covers portions of West Leeville, Carlin East, Four Corners, Turf and other underground gold mining operations and deposits in the Northern Carlin Trend of Nevada (the "Leeville Royalty"). The Leeville Royalty property is included in the Nevada Gold Mines LLC ("NGM") Barrick-Newmont Nevada joint venture.
Leeville Royalty provisional payments to EMX totaled approximately US$480,000 during Q1. Royalty production totaled 259 troy ounces of gold that were principally sourced from the Four Corners (52%), Monarch (17%), West Leeville (16%), Carlin East (8%), and Rita K (6%) and other operations (1%).
Gediktepe, Turkey - The Gediktepe VMS deposit is located in western Turkey. Descriptions of the deposit and historical resource and reserve estimates are disclosed in an NI 43-101 Prefeasibility study entitled "Gediktepe 2019 Prefeasibility Study" with an effective date of March 26, 2019 and filed on SEDAR by Alacer Gold Corp (formerly a reporting issuer in Canada). The Gediktepe Royalties consist of: (i) a perpetual 10% NSR royalty over metals produced from the oxide zone (predominantly gold and silver) after cumulative production of 10,000 gold-equivalent oxide ounces; and (ii) a perpetual 2% NSR royalty over metals produced from the sulfide zone (predominantly copper, zinc, lead, silver and gold), payable after cumulative production of 25,000 gold-equivalent sulfide ounces (gold-equivalent as referenced from an underlying 2019 Share Purchase Agreement).
The Gediktepe Royalties were acquired as part of the SSR royalty portfolio transaction (see Company news release dated July 29, 2021), and are being advanced by operator Lidya Madencilik ("Lidya"), a private Turkish company. Since acquiring the Royalties, EMX has maintained discussions with Lidya, who commenced initial mining activities in Q4 2021. Mining and processing of oxide gold materials continued in Q1, and Lidya has informed the Company that it will likely achieve the 10,000 ounce production milestone in Q2 or Q3, 2022. The EMX royalty will commence paying once this threshold is reached.
Balya, Turkey - The Balya royalty property is located in the historical Balya lead-zinc-silver mining district in northwestern Turkey. EMX holds an uncapped 4% NSR royalty on the "Balya North Deposit", which is operated by Esan Eczacibaşi Endüstriyel Hammaddeler San. ve Tic. A.Ş. ("Esan"), a private Turkish company. Esan operates a lead-zinc mine and flotation mill on the property immediately adjacent to EMX's Balya North royalty property.
The initial phases of mining at Balya North commenced in late 2021, and material produced from Balya North is currently undergoing metallurgical test work. Mined material has been stockpiled on site at Balya North, and Esan has advised EMX that it will likely begin processing the material in June 2022.
Advanced Royalty Projects
Asset | Location | Operator | Commodity | Stage | Royalty Interest |
Gold Bar South | Nevada | McEwen Mining Inc. | Gold | Feasibility | 1% NSR |
Diablillos | Argentina | AbraSilver Resource Corp | Silver-Gold | PEA | 1% NSR |
Berenguela | Peru | Aftermath Silver Ltd | Copper-Silver-Manganese-Zinc | Resource - Advancing PFS | 1% -1.25% NSR |
Challacolla | Chile | Aftermath Silver Ltd | Silver-Gold | Resource Development | 2% NSR |
Yenipazar | Turkey | Virtus Madencilik | Gold | Feasibility | 6% -10% NPI |
Akarca | Turkey | Çiftay İnşaat Taahhüt ve Ticaret A.Ş. | Silver-Gold | Resource Development | 1%-3% NSR |
Sisorta | Turkey | Bahar Madencilik Sinayi ve Ticaret Ltd Sti | Gold | Feasibility | 3.5%-5% NSR |
Viscaria | Sweden | Copperstone Resources AB | Copper-Iron | Resource Development | 0.5% to 1% NSR |
Kaukua | Finland | Palladium One Mining Inc | PGE-Nickel-Copper | Resource Development | 2% NSR |
Significant Updates
Gold Bar South, Nevada - EMX's Gold Bar South 1% NSR royalty property, operated by McEwen Mining Inc. (TSX & NYSE: MUX) ("McEwen"), covers a sediment-hosted, oxide gold deposit situated ~5.6 kilometers southeast of McEwen's Gold Bar open pit mining operation in north-central Nevada.
McEwen provided a "2021 Year End and Q4 Results" update which stated that "The permitting process to access ore at the Gold Bar South satellite deposit is ongoing and we anticipate receiving the permit in Q1 of 2022. Commencement of gold production from Gold Bar South is planned for the second half of 2022." No material changes disclosed for the three months ended March 31, 2022.
Diablillos, Argentina - EMX's Diablillos 1% NSR royalty was acquired in 2021 as part of the SSR royalty portfolio transaction. Diablillos is a high sulfidation silver-gold project, located in the Puna region of Salta Province, Argentina that is owned and operated by AbraSilver Resource Corp. (TSX-V: ABRA, "AbraSilver"). There are seven known mineralized zones, with the Oculto zone advanced to the PEA stage of assessment. During the quarter AbraSilver reported encouraging drill results lying outside of the current conceptualized open pit (see AbraSilver news releases dated February 22, 2022, and March 10, 2022).
Berenguela, Peru - The Berenguela project, located in the Puno region of southeastern Peru, is a resource stage polymetallic carbonate replacement-style deposit being advanced by Aftermath Silver Ltd. ("Aftermath") (TSX-V: AAG; OTCQB: AAGFF). Aftermath is earning 100% project interest per a definitive acquisition agreement originally executed with SSR Mining. EMX's royalty interest in, and future earn-in payments from, Berenguela were acquired in 2021 as part of the SSR royalty portfolio transaction. The project hosts an historical JORC silver-copper-manganese-zinc mineral resource.
Aftermath reported completion of 39 drill holes, totalling 3,680 meters from its ongoing exploration and metallurgical programs (see Aftermath news release dated March 21, 2022).
Challacolla, Chile - Challacolla is a resource stage low-sulphidation epithermal deposit located in Chile's northernmost Region I. The project operator, Aftermath, is earning 100% project interest per a binding agreement with Mandalay Resources Corporation (TSX: MND). EMX's interest in the Challacolla project was acquired in 2021 as part of the SSR Royalty Portfolio transaction (see Company news releases dated July 29, and October 21, 2021). After earn-in, EMX will retain a 2% NSR royalty, payable after 36 million ounces of silver have been produced, with a cap of US$5 million. This cap is not subject to a U.S. Consumer Price Index (US CPI) adjustment. The project hosts historical open pit and underground constrained silver-gold resources. Aftermath did not provide project updates during Q1.
Yenipazar, Turkey - The Yenipazar polymetallic VMS deposit in central Turkey is currently owned and advanced by Virtus Madencilik ("Virtus"), a private Turkish company that is partly owned by Trafigura Ventures V B.V. EMX holds a Net Profits Interest ("NPI") royalty that is set at 6% until US$165 million in revenues are received, after which the NPI converts to a 10% interest. The Yenipazar Royalty was acquired by EMX in 2021 as part of the SSR royalty portfolio transaction.
Previous owner Aldridge Minerals Inc. ("Aldridge") disclosed an historical feasibility study on the project in 2013, which was updated in 2014 and filed on SEDAR. This remains the most recent public disclosure of technical information and historical mining reserves and resources on the project. Virtus recently updated the feasibility study (this in-house report remains unpublished as of yet) and is currently seeking project financing for development of the project. Since acquiring the royalty, EMX has maintained contact with Virtus and has received updates on the status of the project.
Akarca, Turkey - The Akarca epithermal gold-silver deposit in western Turkey was discovered by EMX in 2006 during a regional exploration program. The project was later sold to current owner Çiftay İnşaat Taahhüt ve Ticaret A.Ş. ("Çiftay"), a private Turkish company. Çiftay is responsible for making a series of pre-production gold bullion payments to EMX, and EMX retains a 1% NSR royalty on the initial 100,000 ounces of gold production from the project, a 2% NSR royalty on production on the next 400,000 ounces of gold produced, and a 3% NSR royalty on any production of gold after 500,000 ounces of gold are produced. The NSR royalties are uncapped and cannot be bought down.
To date, over 350 exploration drill holes and 17 kilometers of trenching have been completed along with collection of over 6,500 rock and 3,500 soil samples and preparation of in-house (non-public) resource models for the gold-silver mineralization. Çiftay is current determining strategies for continued exploration and development of the project.
In 2020 Çiftay made the decision to halt further field work while awaiting permits and a court decision regarding land use designations in the area. EMX has maintained active discussions with Çiftay since that time, and Çiftay has informed EMX that it expects the permitting and land use designation issues to be resolved in 2022, which will allow Çiftay to resume its exploration programs at Akarca.
Sisorta, Turkey - The Sisorta project consists of an oxide gold deposit with underlying copper and gold porphyry potential. EMX sold the project in 2016 to Bahar Madencilik Sinayi ve Ticaret Ltd Sti ("Bahar"), a privately owned Turkish company, retaining a royalty interest and advance royalty payment streams. The EMX royalties consist of a 3.5% NSR on any materials mined and processed on site at Sisorta, and a 5% NSR royalty on any materials shipped offsite for processing. Bahar, which operates the nearby Altintepe gold mine, is reviewing development options for the Sisorta project.
Viscaria, Sweden - EMX holds an effective 0.5% to 1.0% NSR royalty interest on the Viscaria copper project located in the Kiruna mining district of Sweden which is operated by Stockholm listed Copperstone Resources AB ("Copperstone"). In 2021 Copperstone continued to drill and explore the Viscaria deposit while also advancing engineering and environmental studies. Copperstone announced in September 2021 that the project had entered the feasibility study phase and expects to significantly expand the mineral resources and planned production rates (see Copperstone news release dated September 20, 2021). Copperstone also filed an environmental permit application its planned mining operation in March 2022 (see Copperstone news release dated March 29, 2022).
The Viscaria deposit contains elements of both VMS and iron oxide-copper-gold ("IOCG") styles of mineralization and was mined from 1983-1996 by a partnership between LKAB and Outokumpu OYJ. Significant JORC and PERC mineral resources remain in the mining area.
In Q1, 2022, Copperstone raised over 200 million Swedish Kronor for advancement of the Viscaria project and announced that it has submitted an application for an environmental permit to the Land and Environment Court in Sweden. This is a critical step towards permitting of a mine in Sweden, and the Copperstone permit application contains detailed descriptions of mining and engineering plans and environmental impact assessments.
Kaukua, Finland - EMX holds a 2% NSR royalty on various exploration licenses covering the Kaukua PGE-Ni-Cu deposit in northern Finland (the "Kaukua Royalty"). The Kaukua deposit is being advanced by Palladium One Mining Inc. (TSX-V: PDM) ("Palladium One"), as part of its flagship Läntinen Koillismaa ("LK") project. Palladium One can purchase 1% of EMX's NSR royalty prior to the delivery of a "bankable feasibility study" for €1 million. The remaining 1% of EMX's NSR royalty is uncapped and cannot be purchased.
PDM's LK project is a PGE rich magmatic Ni-Cu sulfide system. In 2021 Palladium One continued to aggressively drill and explore the LK project, announcing an expansion of its planned drill programs in March 2021 (see Palladium One news release dated March 3, 2021). Palladium One continued to publish favorable assay results from the 2021 drill programs throughout Q1, 2022, with final results announced in February, 2022 (see Palladium One news release dated February 7, 2022). Drill defined zones of PGE-Ni-Cu mineralization are now shown to extend for 4.5 kilometers along strike at LK, and geophysical surveys indicate additional potential for expansion.
Exploration Royalty & Royalty Generation Projects
The Company has 155 exploration stage royalties and 103 royalty generation properties being advanced, and available for partnership (note, these totals do not include producing royalty or advance royalty projects). A complete listing of the exploration stage royalties is included in Appendix A to this MD&A. The following provides an overview of exploration royalties and royalty generation properties by country and commodity.
| Exploration Royalty | Royalty Generation Project | |||||||||||
| Country | Precious Metals | Base Metals | Precious Metals | Base Metals | ||||||||
| USA | 24 | 11 | 25 | 23 | ||||||||
| Canada | 46 | 1 | 20 | 9 | ||||||||
| Mexico | 2 | 1 | - | - | ||||||||
| Haiti | 5 | 2 | - | - | ||||||||
| Chile | 8 | 11 | - | - | ||||||||
| Argentina | 1 | - | - | - | ||||||||
| Sweden | 9 | 11 | 2 | 10 | ||||||||
| Finland | 1 | 2 | - | - | ||||||||
| Norway | 2 | 14 | 4 | 5 | ||||||||
| Serbia | 1 | 1 | - | - | ||||||||
| Turkey | - | 1 | - | 2 | ||||||||
| Australia | 2 | - | 2 | 1 | ||||||||
| 101 | 54 | 53 | 50 | |||||||||
Qualified Persons
Michael P. Sheehan, CPG, a Qualified Person as defined by NI 43-101 and employee of the Company, has reviewed, verified, and approved the above technical disclosure on North America and Latin America. Eric P. Jensen, CPG, a Qualified Person as defined by NI 43-101 and employee of the Company, has reviewed, verified, and approved the above technical disclosure on Europe, Turkey, Australia, and Strategic Investments.
RESULTS OF OPERATIONS
Three Months ended March 31, 2022
The net income for the period ended March 31, 2022 ("Q1-2022") was $23,547,000 compared to a net loss of $4,424,000 for the comparative period ("Q1-2021"). The net income for Q1-2022 was made up of revenues and other income of $2,215,000 (Q1-2021 - $1,298,000), costs and expenses totaling $6,642,000 (Q1-2021 - $3,946,000) and income from other items totaling $33,313,000 (Q1-2021 - loss of $1,776,000). Significant components of other income include a gain on revaluation of investments of $6,329,000 (Q1-2021 - loss $1,321,000), equity income from the Company's investments in associated entities of $1,154,000 (Q1-2021 - $221,000), loss on sale of marketable securities of $199,000 (Q1-2021 - gain of $441,000), finance expenses and other totaling $1,787,000 (Q1-2021 - $Nil), gain on debt modification of $5,008,000 (Q1-2021 - $Nil), settlement gain of $23,846,000 (Q1-2021 - $Nil), foreign exchange adjustments of $1,038,000 (Q1-2021 - $1,117,000), and a deferred income tax expense of $5,339,000 (Q1-2021 - $Nil).
Revenues and other income
The Company earns various sources of revenue and other income including royalty revenue, option revenue earned from mineral property agreements including operator fees on managed projects, gains related to the sale of mineral properties, sale of marketable securities, interest, and dividend income.
During the three months ended March 31, 2022 and 2021, the Company had the following sources of revenues and other income:
| In Thousands of Dollars | ||||||
| Three months ended | Three months ended | |||||
| Revenue and Other Income | March 31, 2022 | March 31, 2021 | ||||
| Royalty revenue | $ | 796 | $ | 392 | ||
| Interest income | 629 | 175 | ||||
| Option and other property income | 790 | 652 | ||||
| Dividend income | - | 79 | ||||
| $ | 2,215 | $ | 1,298 | |||
| Non-IFRS Measures | ||||||
| Adjusted revenue and other income1 | $ | 3,369 | $ | 1,298 |
In Q1-2022, the Company earned $796,000 (Q1-2021 - $392,000) of royalty revenue. This included royalty revenue earned from 259 (Q1-2021 - 120) ounces of gold from the Leeville royalty interest and other pre-production amounts received including AMRs on various properties. The increase compared to the three months ended March 31, 2021, was mainly the result of an increase in production ounces received in the current period as well as the increase of the average realized gold price on ounces received from the Leeville royalty in the current period. In Q1-2022, the average realized gold price for the Leeville royalty was US$1,874 (Q1-2021 - US$1,795) per ounce. Royalty revenue was offset by gold tax and depletion of $611,000 (Q1-2021 - $255,000) for net royalty income of $185,000 (Q1-2021 - $137,000).
Adjusted revenue and other income1 brings into revenues and other income, $1,154,000 (Q1-2021 - $Nil) from the Company's effective royalty interest in the Caserones mine.
Net royalty income from the Leeville and Caserones royalty will fluctuate as result of a combination of ounces received, average price per ounce, and foreign exchange as a result of the royalties being paid in United States dollars ("USD"). Timing of additional AMR's related to other projects and included in royalty revenue can also fluctuate.
_________________________________
1 Adjusted revenue and other income, and adjusted cash provided by (used in) operating activities are non-IFRS financial measures with no standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-IFRS financial measures" section on page 20 of this MD&A for more information on each non-IFRS financial measure.
Interest income was earned on the cash balances the Company holds, a note receivable, interest accretion on the Company's Ensero investment, and interest accretion on deferred compensation payments from Aftermath and AbraSilver.
Option and other property income will fluctuate depending upon the Company's deal flow and structure of property agreements relating to execution payments, staged option payments and operator and management fees. Execution payments can include the fair value of equity interests obtained in the respective partner and cash proceeds. Further, anti-dilution provisions in property agreements provided for additional equity received and are included in option and other property income. For the period ended March 31, 2022, included in option and other property income was $373,000 (Q1-2021 - $398,000) related to the fair value of share equity payments received, as well as cash payments of $70,000 (Q1-2021 - $95,000).
Cost and Expenses
Costs and expenses are comprised of expenditures incurred by the Company to carry out the royalty generation operations and the advancement of projects, as well as marketing and communications. Included in these costs is general and administrative costs for the period end March 31, 2022 and 2021 comprised of the following:
| In Thousands of Dollars | ||||||
| General and administrative expenses | Three months ended | Three months ended | ||||
| March 31, 2022 | March 31, 2021 | |||||
| Salaries, consultants, and benefits | $ | 1,146 | $ | 985 | ||
| Professional fees | 776 | 213 | ||||
| Investor relations and shareholder information | 254 | 172 | ||||
| Transfer agent and filing fees | 208 | 187 | ||||
| Administrative and office | 294 | 274 | ||||
| Travel | 10 | 20 | ||||
| $ | 2,688 | $ | 1,851 |
General and administrative expenses ("G&A") of $2,688,000 were incurred for the three months ended March 31, 2022 compared to $1,851,000 in Q1-2021. General and administrative expenditures will fluctuate from period to period depending on the level of activity and deal flow. Some of the changes in Q1-2022 compared to Q1-2021 are related to:
- Salaries and consultants increased in Q1-2022 by $161,000 compared to Q1-2021 primarily resulting from the timing of short-term incentive plan bonuses and compensation adjustments which were accrued during the current period, as well as increased director compensation as compared to Q1-2021.
- Professional fees increased in Q1-2022 by $563,000 compared to Q1-2021 primarily resulting from legal costs associated with the Barrick settlement with Bullion as well as acquisition due diligence. Professional fees incurred relating to acquisition due diligence and other matters requiring legal and tax advice are expected to fluctuate between periods. The legal fees included in costs and expenses did not include the contingent legal fees paid on the Barrick settlement which was included in the net gain.
- Investor relations increased by $82,000 in Q1-2022 compared to Q1-2021. The Company increased in Q1-2022 the marketing and communications activities, including the attendance of trade shows, and other activities involving travel.
It should be noted that many of our personnel and professional expenditures companywide are denominated in USD and an increase or decrease in the value of the USD compared to the Canadian dollar, which is the Company's reporting currency, will increase or decrease expenditures.
Project and Royalty Generation Costs, Net of Recoveries
Net royalty generation costs increased from $1,287,000 in Q1-2021 to $2,702,000 in Q1-2022. This is a result of an increase in expenditures of $1,370,000 in Q1-2022 compared to Q1-2021 including $1,844,000 (Q1-2021 - $1,098,000) of personnel cost, offset with a decrease in recoveries from partners by $45,000 in Q1-2022 compared to Q1-2021. Royalty generation costs and recoveries from partners vary from period to period depending on the level of activity incurred and comparison between periods does not accurately reflect the activity with the Company. See the highlights, royalty and project review sections for current activities.
Share-based Payments
In Q1-2022 the Company recorded a total of $626,000 in share-based payments compared to $555,000 in Q1-2021. The aggregate share-based payments relate mainly to the fair value of restricted share units vested during the period.
Other
- During the three month period ended March 31, 2022, the Company had an unrealized gain of $6,329,000 (Q1-2021 - loss $1,321,000) related to the fair value adjustments of investments, and a realized loss of $199,000 (Q1-2021 - gain $441,000) for the sale of certain marketable securities held by the Company. The unrealized gain in the current period is attributed to re-pricing of certain private investments based on recent financings closed as well as stronger market performance of other investments in Q1-2022 compared to the Q1-2021.
- During the period ended March 31, 2022, the Company recognized equity income from investments in associates of $1,154,000 (Q1-2021 - $221,000). This primarily related to the share of the Company's net income derived in SLM California which holds the Caserones effective royalty interest.
- During Q1-2022, the Company recognized finance and other expenses of $1,787,000 (Q1-2021 - $Nil) which consisted primarily of interest accrued on the Sprott Credit Facility and VTB Note.
- During Q1-2022, the Company recorded a settlement gain of $23,846,000 (Q1-2021 - $Nil) which related to the settlement with Barrick with respect to Bullion's claim of non-payment of royalties by the Barrick Entities to Bullion on production from properties in the Carlin trend, Nevada. Barrick paid Bullion US$25,000,000 under the settlement, with EMX paying US$6,175,000 as a fee to Bullion's lawyers.
Taxes
During the three months ended March 31, 2022, the Company recorded a deferred income tax expense of $5,339,000 (Q1-2021 - $Nil) which was directly related to the Barrick settlement.
LIQUIDITY AND CAPITAL RESOURCES
The Company considers items included in shareholders' equity as capital. The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
As at March 31, 2022, the Company had a working capital of $60,506,000 (December 31, 2021 - deficit of $14,313,000). The Company has continuing royalty income that will vary depending on royalty ounces received, the price of gold, and foreign exchange rates on US royalty payments. The Company also receives additional cash inflows from the recovery of expenditures from project partners, and investment income including dividends from investments in associated entities. The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through public and/or private placements, sell assets, renegotiate terms of debt, or return capital to shareholders.
The Company is not subject to externally imposed capital requirements other than as disclosed for the Sprott Credit Facility.
Operating Activities
Cash provided by (used in) operating activities for the three months ended March 31, 2022 was $19,786,000 (2021 - ($1,592,000)), and adjusted cash provided by (used in) operating activities1 for the period was $20,928,000 (2021 - ($1,592,000)) and represents expenditures primarily on royalty generation and general and administrative expenses for both periods, offset by royalty income received in the year. Adjusted cash provided by operating activities is adjusted for $1,142,000 (2021 - $Nil) in royalties received from the Company's effective royalty interest at Caserones. A significant component of cash provided by operations in the current period is the net settlement gain of $23,846,000 resulting from the Barrick settlement with Bullion.
Financing Activities
The total cash provided by (used in) financings during the three months ended March 31, 2022 was ($989,000) (2021 - $433,000). The cash used in the current period related primarily to $987,000 (2021 - $Nil) from repayments of the Sprott Credit Facility.
Investing Activities
Cash provided by (used in) investing activities for the three months ended March 31, 2022 was $806,000 compared to ($1,479,000) for the period ended March 31, 2021.
Some of the significant cash investment activities during the period ended March 31, 2022 included:
- The proceeds from the sale of investments of $662,000 (Q1-2021 - $838,000), offset with purchases of $1,292,000 (Q1-2021 - $505,000);
- Receipt of anniversary and option payments totalling $89,000 (Q1-2021 - $143,000) primarily related to the Perry English portfolio in Canada; and
- The Company also received approximately $111,000 (Q1-2021 - $37,000) in interest income earned on cash and loan balances, and $1,142,000 (Q1-2021 - $69,000) in dividends and other distributions.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this MD&A, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company, including, and without limitation, such considerations as liquidity and capital resources.
QUARTERLY INFORMATION
| In Thousands of Dollars, Except Per Share Amounts | ||||||||||||
| Fiscal quarter ended | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | ||||||||
| Revenue and other income | $ | 2,215 | $ | 2,377 | $ | 1,504 | $ | 4,255 | ||||
| Project and royalty generation costs | (5,397 | ) | (4,868 | ) | (3,882 | ) | (5,378 | ) | ||||
| Recoveries from partners | 2,695 | 2,440 | 1,792 | 1,689 | ||||||||
| Share-based payments | 626 | 565 | 1,206 | 1,366 | ||||||||
| Net income (loss) for the period | 23,547 | (10,881 | ) | (10,866 | ) | (3,578 | ) | |||||
| Basic earnings (loss) per share | 0.22 | (0.11 | ) | (0.13 | ) | (0.04 | ) | |||||
| Diluted earnings (loss) per share | 0.22 | (0.11 | ) | (0.13 | ) | (0.04 | ) | |||||
_________________________________
1 Adjusted revenue and other income, and adjusted cash provided by (used in) operating activities are non-IFRS financial measures with no standardized meaning under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Refer to the "Non-IFRS financial measures" section on page 20 of this MD&A for more information on each non-IFRS financial measure.
| In Thousands of Dollars, Except Per Share Amounts | ||||||||||||
| Fiscal quarter ended | March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||
| Revenue and other income | $ | 1,298 | $ | 2,837 | $ | 1,261 | $ | 2,350 | ||||
| Project and royalty generation costs | (4,027 | ) | (3,672 | ) | (5,838 | ) | (4,765 | ) | ||||
| Recoveries from partners | 2,740 | 2,350 | 3,374 | 1,721 | ||||||||
| Share-based payments | 542 | 454 | 14 | 1,448 | ||||||||
| Net income (loss) for the period | (4,424 | ) | (3,933 | ) | (913 | ) | (3,281 | ) | ||||
| Basic earnings (loss) per share | (0.05 | ) | (0.00 | ) | (0.01 | ) | (0.04 | ) | ||||
| Diluted earnings (loss) per share | (0.05 | ) | (0.00 | ) | (0.01 | ) | (0.04 | ) | ||||
RELATED PARTY TRANSACTIONS
The aggregate value of transactions and outstanding balances relating to key management personnel and directors were as follows:
| In Thousands of dollars | |||||||||
| Three months ended March 31, 2022 | Salary and fees | Share-based Payments | Total | ||||||
| Management | $ | 436 | $ | 234 | $ | 670 | |||
| Outside directors | 260 | 101 | 361 | ||||||
| Seabord Management Corp.* | 65 | - | 65 | ||||||
| Total | $ | 761 | $ | 335 | $ | 1,096 |
| In Thousands of dollars | |||||||||
| Three months ended March 31, 2021 | Salary and fees | Share-based Payments | Total | ||||||
| Management | $ | 434 | $ | 230 | $ | 664 | |||
| Outside directors | 189 | 41 | 230 | ||||||
| Seabord Management Corp.* | 65 | - | 65 | ||||||
| Total | $ | 688 | $ | 271 | $ | 959 |
*Seabord Management Corp. ("Seabord") is a management services company partially owned by the CFO and the Chairman of the Board of Directors of the Company. Seabord provides accounting and administration staff, and office space to the Company.
Included in accounts payable and accrued liabilities at March 31, 2022 is $369 (December 31, 2021 - $3) owed to key management personnel and other related parties and includes accruals for short term incentive bonuses and compensation adjustments.
NEW ACCOUNTING PRONOUNCEMENTS
Accounting standards adopted during the period
Please refer to the unaudited condensed consolidated financial statements for the three months ended March 31, 2022 on www.sedar.com.
Accounting pronouncements not yet effective
Please refer to the unaudited condensed consolidated financial statements for the three months ended March 31, 2022 on www.sedar.com.
RISK AND CAPITAL MANAGEMENT: FINANCIAL INSTRUMENTS
Please refer to the unaudited condensed consolidated financial statements for the three months ended March 31, 2022 on www.sedar.com.
CRITICAL ACCOUNTING JUDGEMENTS AND SIGNIFICANT ESTIMATES AND UNCERTAINTIES
Please refer to the unaudited condensed consolidated financial statements for the three months ended March 31, 2022 on www.sedar.com.
RISKS AND UNCERTAINTIES
The Company has identified the following risks and uncertainties which are consistent with those risks identified for the period ended March 31, 2022: The impact of the current Covid-19 pandemic may significantly impact the Company, Mineral Property Exploration Risks, Revenue and Royalty Risks, Financing and Share Price Fluctuation Risks, Foreign Countries and Political Risks, Competition, Return on Investment Risk, No Assurance of Titles or Borders, Unknown Defects or Impairments in Our Royalty or Streaming Interests, Operators' Interpretation of Our Royalty and Stream Interests; Unfulfilled Contractual Obligations, Currency Risks, Exploration Funding Risk, Insured and Uninsured Risks, Environmental Risks and Hazards, Fluctuating Metal Prices, Extensive Governmental Regulation and Permitting Requirements Risks, Key Personnel Risk, Conflicts of Interest, Passive Foreign Investment Company, Corporate Governance and Public Disclosure Regulations and Internal Controls over Financial Reporting.
All of EMX's royalty properties and royalty generating operations are subject to the risk of emerging infectious diseases, including COVID-19, or the threat of outbreaks of viruses or other contagions through the mining operations and exploration properties to which EMX's royalty interests and potential royalty interests relate. In addition, EMX's own operations are exposed to infectious disease risks. Accordingly, any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease could have a material adverse effect on EMX, its business, results from operations and financial condition.
The COVID-19 global health pandemic is significantly impacting the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown and to date has included extreme volatility in financial markets, a slowdown in economic activity, extreme volatility in commodity prices (including gold, silver, palladium and oil and gas) and has raised the prospect of an extended global recession. As efforts are undertaken to slow the spread of the COVID-19 pandemic, the operation and development of mining projects may be impacted. If the operation or development of one or more of the properties in which the Company holds a royalty, stream or other interest and from which it receives or expects to receive revenue is suspended, it may have an adverse impact on the Company's profitability, financial condition and the trading price of the Company's securities. The broader impact of the COVID-19 pandemic on investors, businesses, the global economy or financial and commodity markets may also have a material adverse impact on the Company's profitability, results of operations, financial conditions and the trading price of the Company's securities. The Company continues to monitor the situation and the impact COVID-19 may have on its business.
For details on the above risks and uncertainties, please refer to the MD&A for the year ended December 31, 2021 on www.sedar.com.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
At the end of the period covered by this MD&A, the Company carried out an evaluation, under the supervision of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company's CEO and CFO have concluded that, as of the end of the period covered by this MD&A, as discussed below under "Management's Report on Internal Control Over Financial Reporting," our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Commission rules and forms, and (ii) accumulated and communicated to the Company's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. A company's internal control over financial reporting is a process designed by, or under the supervision of, the CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable assurance, not absolute assurance, that the objectives of the control system are met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
Management, including the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2022, based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that EMX’s internal control over financial reporting was effective as at March 31, 2022.
Changes in Internal Control over Financial Reporting
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. During the period covered by this MD&A, management made improvements in application of existing internal controls, while also implementing new internal controls over financial reporting that may materially affect, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Management's Initiatives
Management continues to consult an independent third-party Sarbanes-Oxley consultant to assist with the Company's internal controls. That consultant will continue to work with us to identify any weakness and further enhance our internal controls. Any remediation efforts will include the implementation of additional controls to ensure all risks have been addressed.
OUTSTANDING SHARE DATA
At May 12, 2022, the Company had 109,383,127 common shares issued and outstanding. There were also 8,968,000 stock options outstanding with expiry dates ranging from August 28, 2022 to April 29, 2027 and 7,211,401 warrants outstanding with expiry dates ranging from November 7, 2022 to April 14, 2027.
FORWARD-LOOKING INFORMATION
This MD&A may contain forward-looking statements. These forward-looking statements may include statements regarding perceived merit of properties, exploration results and budgets, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, completion of transactions, market prices for metals or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral resource estimates may also be deemed to constitute "forward-looking statements" to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as "expects", "anticipates", "believes", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives", "potential", "possible" or variations thereof or stating that certain actions, events, conditions or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:
• the Company's ability to achieve production at any of its mineral properties;
• estimated capital costs, operating costs, production and economic returns;
• estimated metal pricing, metallurgy, mineability, marketability and operating and capital costs, together with other assumptions underlying the Company's resource and reserve estimates;
• the Company's expected ability to develop adequate infrastructure at a reasonable cost;
• assumptions that all necessary permits and governmental approvals will be obtained;
• assumptions made in the interpretation of drill results, the geology, grade and continuity of the Company's mineral deposits;
• the Company's expectations regarding demand for equipment, skilled labor and services needed for exploration and development of mineral properties; and
• the Company's activities will not be adversely disrupted or impeded by development, operating or regulatory risks.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation:
• uncertainty of whether there will ever be production at the Company's mineral exploration and development properties;
• uncertainty of estimates of capital costs, operating costs, production and economic returns;
• uncertainties relating to the assumptions underlying the Company's resource and reserve estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs;
• risks related to the Company's ability to commence production and generate material revenues or obtain adequate financing for its planned exploration and development activities;
• risks related to the Company's ability to finance the development of its mineral properties through external financing, joint ventures or other strategic alliances, the sale of property interests or otherwise;
• risks related to the third parties on which the Company depends for its exploration and development activities;
• dependence on cooperation of joint venture partners in exploration and development of properties;
• credit, liquidity, interest rate and currency risks;
• risks related to market events and general economic conditions;
• uncertainty related to inferred mineral resources;
• risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of the Company's mineral deposits;
• risks related to lack of adequate infrastructure;
• mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in development, construction or production;
• the risk that permits and governmental approvals necessary to develop and operate mines on the Company's properties will not be available on a timely basis or at all;
• commodity price fluctuations;
• risks related to governmental regulation and permits, including environmental regulation;
• risks related to the need for reclamation activities on the Company's properties and uncertainty of cost estimates related thereto;
• uncertainty related to title to the Company's mineral properties;
• uncertainty as to the outcome of potential litigation;
• risks related to increases in demand for equipment, skilled labor and services needed for exploration and development of mineral properties, and related cost increases;
• increased competition in the mining industry;
• the Company's need to attract and retain qualified management and technical personnel;
• risks related to hedging arrangements or the lack thereof;
• uncertainty as to the Company's ability to acquire additional commercially mineable mineral rights;
• risks related to the integration of potential new acquisitions into the Company's existing operations;
• risks related to unknown liabilities in connection with acquisitions;
• risks related to conflicts of interest of some of the directors of the Company;
• risks related to global climate change;
• risks related to adverse publicity from non-governmental organizations;
• risks related to political uncertainty or instability in countries where the Company's mineral properties are located;
• uncertainty as to the Company's passive foreign investment company ("PFIC") status;
• uncertainty as to the Company's status as a "foreign private issuer" and "emerging growth company" in future years;
• uncertainty as to the Company's ability to maintain the adequacy of internal control over financial reporting; and
• risks related to regulatory and legal compliance and increased costs relating thereto.
This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors.
The Company's forward-looking statements are based on the beliefs, expectations and opinions of management on the date of this MD&A, and the Company does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
More information about the Company including its recent financial reports is available on SEDAR at www.sedar.com. The Company's Annual Report on Form 40-F, including the recent financial reports, is available on SEC's EDGAR website at www.sec.gov and on the Company's website at www.EMXroyalty.com.
Cautionary Note to Investors Concerning Estimates of Inferred, Indicated and Measured Resources
Investors are cautioned that Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Geological evidence is sufficient to imply, but not verify, geological and grade continuity of Inferred mineral resources. It is reasonably expected that the majority of Inferred resources could be upgraded to Indicated resources with continued exploration. Under Canadian rules, estimates of Inferred mineral resources may not be converted to a mineral reserve, or form the basis of economic analysis, production schedule, or estimated mine life in publicly disclosed Pre-Feasibility or Feasibility Studies, or in the Life of Mine plans and cash flow models of developed mines. Inferred mineral resources can only be used in economic studies as provided under NI 43-101. U.S. investors are cautioned not to assume that part or all of an Inferred resource exists, or is economically or legally mineable. U.S. investors are further cautioned not to assume that any part or all of a mineral resource in the Measured and Indicated categories will ever be converted into reserves.
NON-IFRS FINANCIAL MEASURES
Adjusted Revenue and Other Income and Adjusted Cash Flows from Operating Activities
Adjusted revenue and other income, and adjusted cash flows from operating activities are non-IFRS financial measures, which are defined by EMX by including the following items from Loss for the year and cash flows from operations respectively.
- Equity income from associated entities holding royalty interests and the related cash flows related to the Company's effective royalty on Caserones.
Management uses adjusted revenue and other income, and adjusted cash flows from operating activities to evaluate the underlying operating performance of EMX for the reporting periods presented, to assist with the planning and forecasting of future operating results, and to supplement information in its financial statements. Management believes that in addition to measures prepared in accordance with IFRS such as revenue and other income, and cash flows from operations, our investors may use adjusted revenue and other income, and adjusted cash flows from operating activities to evaluate the results of the underlying business of EMX, particularly since the included items may not typically be included in operating results. While the adjustments to revenue and other income, and cash flows from operations in these measures may include items that are both recurring and non-recurring, management believes that adjusted revenue and other income, and adjusted cash flows from operating activities are useful measures of EMX's performance because they adjust for items which management believes reflect our core operating results from period to period. Adjusted revenue and other income, and adjusted cash flows from operating activities are intended to provide additional information to investors and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. They do not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers.
Reconciliation of Adjusted Revenue and Other Income, and Adjusted Cash Flows from Operating Activities
| In Thousands of Dollars | ||||||||||||
| Three months ended March 31, 2022 | Three months ended March 31, 2021 | |||||||||||
| Revenue and other | Cash provided by | Revenue and other | Cash used in | |||||||||
| Income | operating activities | Income | operating activities | |||||||||
| Per financial statements | $ | 2,215 | $ | 19,786 | $ | 1,298 | $ | (1,592 | ) | |||
| Equity income from associated entity | ||||||||||||
| holding an effective royalty interest in | ||||||||||||
| Caserones and related cash flow | 1,154 | 1,142 | - | - | ||||||||
| Adjusted | $ | 3,369 | $ | 20,928 | $ | 1,298 | $ | (1,592 | ) | |||
Appendix A
List of Royalty Assets
LOCATION | PROPERTY | ROYALTY/PAYMENTS | COMMODITY | COMMODITY | OPERATOR | STATUS |
Argentina | Diablillos | 1.0% NSR | Precious Metals | Silver-Gold | AbraSilver Resources | Advanced Royalty |
M18/Aguas Perdidas | 1.0% NSR | Precious Metals | Silver | AbraSilver Resources | Exploration | |
Australia, New South Wales | Koonenberry | 3% NSR & AAR payments (NQM) | Precious Metals | Gold | KNB & Rockwell | Exploration |
Australia, Queensland | Queensland Gold | 2.5% NSR & other payments | Precious Metals | Gold-Copper | Many Peaks Gold Pty Ltd | Exploration |
Canada, British Columbia | E&L Nickel Mountain | 1.0% NSR | Base Metals | Nickel-Copper | Garibaldi Resources | Exploration |
Hunter 1-12 | 2.5% NSR | Precious Metals | Gold | Cassair Gold | Exploration | |
Pyramid | 1.0% NSR | Precious Metals | Gold | Norra Metals Corp | Exploration | |
Canada, Manitoba | Tartan Lake | 2.0% NSR | Precious Metals | Gold | Satori Resources | Exploration |
Canada, Ontario | Birch/Uchi multiple groups | 1.5% NSR | Precious Metals | Gold | Huntington Exploration | Exploration |
Bruce Lake | 1.5% NSR & other payments | Precious Metals | Gold | Portofino | Exploration | |
Bruce Lake - Pakwash North | 1.5% NSR & other payments | Precious Metals | Gold | Goldon | Exploration | |
Cameron Lake East | Other payments | Precious Metals | Gold | Gold Hunter Resources | Exploration | |
Cameron Lake West | Other payments | Precious Metals | Gold | NorthBound Capital | Exploration | |
Camping Lake | 1.5% NSR & other payments | Precious Metals | Gold | Prime Meridian Resources | Exploration | |
Confederation Lake | 1.5% NSR & other payments | Precious Metals | Gold | Trillium Gold | Exploration | |
Dash Lake | 1.5% NSR & other payments | Precious Metals | Gold | Shafer Resources | Exploration | |
Dent-Jackson | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Dixie Halo | 0.75% NSR & other payments | Precious Metals | Gold | BTU Metals | Exploration | |
Ears Falls | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Confederation North - Northern Vision | 1.5% NSR & other payments | Precious Metals | Gold | Infinite Ore Corp | Exploration | |
Confederation South - Dixie Lake2 | 1.5% NSR & other payments | Precious Metals | Gold | Infinite Ore Corp | Exploration | |
Confederation South - Dixie Lake 3 | 1.5% NSR & other payments | Precious Metals | Gold | Infinite Ore Corp | Exploration | |
Fairchild Lake | 1.5% NSR & other payments | Precious Metals | Gold | Fairchild Gold | Exploration | |
Jackson Manion | 1.5% NSR | Precious Metals | Gold | Huntington Exploration Inc | Exploration | |
Kwai | 1.5% NSR & other payments | Precious Metals | Gold | Golden Goliath | Exploration | |
Lang Lake | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Leo | 1.5% NSR & other payments | Precious Metals | Gold | Trillium Gold | Exploration | |
Longlegged Lake | 1.5% NSR & other payments | Precious Metals | Gold | Silver Dollar Resources | Exploration | |
Manitou Project | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Maskootch | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Maybrun Mine | Other payments | Precious Metals | Gold | NorthBound Capital | Exploration | |
McDonough East | 1.5% NSR & other payments | Precious Metals | Gold | Musk Metals | Exploration | |
McDonough/Pipestone | 1.5% NSR & other payments | Precious Metals | Gold | Goldon | Exploration | |
McVicar Lake | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration | |
Mt. Jamie North Gold - Todd | 1.5% NSR & other payments | Precious Metals | Gold | Stone Gold | Exploration | |
Nabish Lake | 3.0% NSR & other payments | Precious Metals | Gold | Heritage Mining | Exploration | |
North Pakwash | 1.5% NSR & other payments | Precious Metals | Gold | Trillium Gold | Exploration | |
Pakwash Lake | 1.5% NSR & other payments | Precious Metals | Gold | Silver Dollar Resources | Exploration | |
Red Lake Gold 1 | 2.5% NSR | Precious Metals | Gold | Pacton Gold | Exploration | |
Red Lake Gold - Gullrock Lake | 0.25% to 2.25% & other payments | Precious Metals | Gold | Pacton Gold | Exploration | |
Red Lake Gold - Duchess | 0.25% to 2.25% & other payments | Precious Metals | Gold | Pacton Gold | Exploration | |
Red Lake Gold - Red Lake | 0.25% to 2.25% & other payments | Precious Metals | Gold | Pacton Gold | Exploration | |
Red Lake Gold - Tilly | 0.25% to 2.25% & other payments | Precious Metals | Gold | Pacton Gold | Exploration | |
Sandy Pines/Fly Lake/Joy | 1.5% NSR & other payments | Precious Metals
| Gold | Pistol Bay | Exploration | |
Shabu - Cross River | 1.5% NSR & other payments | Precious Metals | Gold | Cross River Ventures | Exploration |
Appendix A
List of Royalty Assets
LOCATION | PROPERTY | ROYALTY/PAYMENTS | COMMODITY | COMMODITY | OPERATOR | STATUS |
Canada, Ontario | Shabu - Mastadon - Taura Gold | 1.5% NSR | Precious Metals | Gold | Mastadon | Exploration |
South of Otter | 1.5% NSR & other payments | Precious Metals | Gold | Portofino | Exploration | |
Swain Lake | 1.5% NSR | Precious Metals | Gold | Pacton Gold | Exploration | |
West Madsen (B) | Other payments | Precious Metals | Gold | Great Bear | Exploration | |
Canada, Quebec | Fernet | 1.0% NSR & other payments | Precious Metals | Gold | QCX Gold Corp | Exploration |
Portage River | 1.5% NSR & other payments | Precious Metals | Gold | Frontline Gold | Exploration | |
Chile | Arrieros | 1.0% NSR | Base Metals | Copper-Molybdenum-Gold | Pampa Metals Corp | Exploration |
Block 2 | 1.0% NSR | Base Metals | Copper-Molybdenum | Pampa Metals Corp | Exploration | |
Block 3 | 1.0% NSR | Base Metals | Copper-Molybdenum | Pampa Metals Corp | Exploration | |
Block 4 | 1.0% NSR | Base Metals | Copper-Molybdenum | Pampa Metals Corp | Exploration | |
Caserones | 0.7335% NSR | Base Metals | Copper-Molybdenum | JX Nippon | Producing Royalty | |
Cerro Blanco | 1.0% NSR | Base Metals | Copper-Molybdenum-Gold | Pampa Metals Corp | Exploration | |
Cerro Buenos Aires | 1.0% NSR | Base Metals | Copper-Molybdenum-Gold-Silver | Pampa Metals Corp | Exploration | |
Challacollo | 2.0% NSR | Precious Metals | Silver-Gold | Aftermath Silver | Advanced Royalty | |
Juncal and La Flora | 1.0% NSR | Precious Metals | Gold | Austral Gold | Exploration | |
Kolla Kananchiari - Bronce Weste | 1% NSR precious metals, 0.5% NSR base metals | Precious Metals | Gold-Copper-Silver | Masglas America Corporation | Exploration | |
Las Animas | 1.5% NSR | Base Metals | Copper-Gold | Atacama Copper Exploration Ltd | Exploration | |
Limbo | 1.0% NSR | Precious Metals | Gold-Silver | Austral Gold Ltd | Exploration | |
Magallanes | 1.0% NSR | Precious Metals | Gold-Silver | Austral Gold Ltd | Exploration | |
Morros Blancos | 1.0% NSR | Base Metals | Copper-Gold-Molybdenum | Pampa Metals Corp | Exploration | |
Redono-Veronica | 1.0% NSR | Base Metals | Copper-Molybdenum | Pampa Metals Corp | Exploration | |
Reprado | 1.0% NSR | Precious Metals | Gold-Silver | Austral Gold Ltd | Exploration | |
San Guillermo | 0.5% NSR | Precious Metals | Gold-Silver | Austral Gold Ltd | Exploration | |
San Valentino | 1.0% NSR | Base Metals | Copper-Gold-Molybdenum | Atacama Copper Exploration Ltd | Exploration | |
T4 | 1.5% NSR | Base Metals | Copper-Gold | Atacama Copper Exploration Ltd | Exploration | |
Victoria Norte | 2.0% NSR | Precious Metals | Gold-Silver / Copper-Molybdenum | Hochschild Mining PLC | Exploration | |
Victoria Sur | 1.0% NSR | Precious Metals | Gold-Silver-Copper | Pampa Metals Corp | Exploration | |
Finland | Kaukua | 2% NSR | Base Metals | PGE-Nickel-Copper-Gold | Palladium One | Advanced Royalty |
Kuusamo | 3% NSR & other payments | Base Metals | PGE-Nickel-Copper-Gold | Sienna Resources Inc | Exploration | |
Oijarvi | 1%/3% NSR | Precious Metals | Gold-Silver | Gold Line Resources | Exploration | |
Haiti | Grand Bois | 0.5% NSR | Precious Metals | Gold-Copper | Sono Global Holdings | Exploration |
Grand Bois & Surrounding Properties | 0.5% NSR | Base Metals | Copper-Gold | Newmont Ventures Ltd | Exploration | |
La Miel | 0.5% NSR | Precious Metals | Gold-Copper | Newmont Ventures Ltd | Exploration | |
La Mine | 0.5% NSR | Precious Metals | Gold-Copper | Newmont Ventures Ltd | Exploration | |
North Central | 0.5% NSR | Precious Metals | Gold-Copper | Newmont Ventures Ltd | Exploration | |
Northeast | 0.5% NSR | Precious Metals | Gold-Copper | Newmont Ventures Ltd | Exploration | |
Northwest | 0.5% NSR | Base Metals | Copper-Gold | Newmont Ventures Ltd | Exploration | |
Mexico, Durango | El Mogote | 2.0% NSR | Precious Metals | Gold-Silver | Industrias Peñoles | Exploration |
Mexico, Durango | San Agustin Sulfides | 2.0% NSR | Precious Metals | Gold | Argonaut Gold | Exploration |
Appendix A
List of Royalty Assets
LOCATION | PROPERTY | ROYALTY/PAYMENTS | COMMODITY | COMMODITY | OPERATOR | STATUS |
Mexico, Sinaloa | San Marcial | 0.75% NSR | Base Metals | Silver-Gold-Zinc-Lead | GR Silver | Exploration |
Norway | Bamble | 2.5% NSR & other payments | Base Metals | Nickel-Copper-Cobalt-PGE | Martin Laboratories EMG Ltd | Exploration |
Bleikvassli | 3% NSR & other payments | Base Metals | Zinc-Lead-Copper | Norra Metals Corp | Exploration | |
Bleka | 3% NSR & other payments | Precious Metals | Gold | Sienna Resources Inc | Exploration | |
Brattasen | 2.5% NSR & other payments | Base Metals | Nickel-Copper-Cobalt-PGE | Martin Laboratories EMG Ltd | Exploration | |
Burfjord | 3% NSR & other payments | Base Metals | Copper-Gold | Norden Crown Metals Corp | Exploration | |
Espedalen | 3% NSR & other payments | Base Metals | Nickel-Copper-Cobalt | Kendric Resources | Exploration | |
Flat | 2.5% NSR & other payments | Base Metals | Nickel-Copper-Cobalt-PGE | Martin Laboratories EMG Ltd | Exploration | |
Hosanger | 3% NSR & other payments | Base Metals | Nickel-Copper-Cobalt | Kendric Resources | Exploration | |
Kjoli | 2.5% NSR & other payments | Base Metals | Copper-Zinc-Lead | Capella Minerals Ltd | Exploration | |
Lokken | 2.5% NSR & other payments | Base Metals | Copper-Zinc-Lead | Capella Minerals Ltd | Exploration | |
Meraker | 3% NSR & other payments | Base Metals | Copper-Zinc-Gold | Norra Metals Corp | Exploration | |
Mo-i-Rana | 2.5% NSR, AAR's & equity interest | Base Metals | Copper-Lead-Zinc-Gold | Mahive Minerals AB | Exploration | |
Rostvangen | 3% NSR & other payments | Base Metals | Nickel-Copper-Cobalt | Playfair Mining Ltd | Exploration | |
Sigdal | 3% NSR & other payments | Base Metals | Nickel-Copper-Cobalt | Kendric Resources | Exploration | |
Vakkerlien | 3% NSR & other payments | Base Metals | Nickel-Copper-Cobalt | Playfair Mining Ltd | Exploration | |
Vekselmyr | 3% NSR & other payments | Precious Metals | Gold | Sienna Resources Inc | Exploration | |
Peru | Berenguela | 1.0% - 1.25% NSR | Base Metals | Copper-Silver-Manganese-Zinc | Aftermath Silver | Advanced Royalty |
Serbia | Jasikovo East - Durlan Potok | 0.5% NSRS1 | Base Metals | Copper-Gold | Zijin Mining | Exploration |
Timok - (Brestovac West license) | 2.0% NSR on Au and Ag, 1% NSR other metals | Precious Metals | Gold | Zijin Mining | Exploration | |
Timok - Cukaru Peki | 0.5% NSRS1 | Base Metals | Copper-Gold | Zijin Mining | Producing Royalty | |
Sweden | Blabarliden | 3% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration |
Faboliden Norra | 2.5% NSR & other payments | Precious Metals | Gold | Capella Minerals Ltd | Exploration | |
Fiskeltrask | 3% NSR & other payments | Base Metals | Ni-Cu-Co | Bayrock Resources Ltd | Exploration | |
Gumsberg | 3% NSR & other payments | Base Metals | Zinc-Lead-Silver | Norden Crown Metals Corp | Exploration | |
Kankberg Norra | 3% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Kattisavan | 3% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Klippen | 1% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Kukasjarvi | 3% NSR & other payments | Base Metals | Ni-Cu-Co | Bayrock Resources Ltd | Exploration | |
Mjovattnet | 2.5% NSR & other payments | Base Metals | Nickel-Copper-Cobalt-PGE | Martin Laboratories EMG Ltd | Exploration | |
Njuggtraskliden | 2.5% NSR & other payments | Base Metals | Nickel-Copper-Cobalt-PGE | Martin Laboratories EMG Ltd | Exploration | |
Nottrask | 3% NSR & other payments | Base Metals | Ni-Cu-Co | Bayrock Resources Ltd | Exploration | |
Paubacken | 3% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Rotjarnen | 2.5% NSR & other payments | Precious Metals | Gold | Capella Minerals Ltd | Exploration | |
Skogstrask | 3% NSR & other payments | Base Metals | Ni-Cu-Co | Bayrock Resources Ltd | Exploration | |
Solvik | 2.5% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Storjuktan | 3% NSR & other payments | Precious Metals | Gold | Gold Line Resources | Exploration | |
Svardsjo | 2.5% NSR & other payments | Base Metals | Copper-Zinc-Lead-Silver-Gold | District Metals | Exploration |
Appendix A
List of Royalty Assets
LOCATION | PROPERTY | ROYALTY/PAYMENTS | COMMODITY | COMMODITY | OPERATOR | STATUS |
| Tomtebo | 2.5% NSR & other payments | Base Metals | Copper-Zinc-Lead-Silver-Gold | District Metals | Exploration |
Trollberget | 2.5% NSR & other payments | Base Metals | Copper-Zinc-Lead-Silver-Gold | District Metals | Exploration | |
Viscaria | 1.0% NSR | Base Metals | Copper (Iron) | Copperstone Resources | Advanced Royalty | |
Vuostok | 3% NSR & other payments | Base Metals | Ni-Cu-Co | Bayrock Resources Ltd | Exploration | |
Turkey | Akarca | 1-3% NSR & other payments | Precious Metals | Gold-Silver | Çiftay | Advanced Royalty |
Alankoy | 2.5% NSR & other payments | Base Metals | Copper-Gold | Kar Mineral Madencilik | Exploration | |
Balya | 4% NSR & other payments | Base Metals | Zinc-Lead-Silver | Esan | Producing Royalty | |
Gediktepe Oxide / Sulfide | 10.0% NSR Oxide / 2.0% NSR Sulfide | Precious Metals | Gold-Silver / Copper-Zinc-Gold-Silver | Lidya Madencilik | Producing Royalty | |
Sisorta | 3.5-5% NSR & other payments | Precious Metals | Gold (Copper) | Bahar Madencilik | Advanced Royalty | |
Yenipazar | 6.0% - 10.0% NPI | Precious Metals | Gold-Silver-Zinc-Copper-Lead | Virtus Mining/Trafigura | Advanced Royalty | |
USA, Alaska | 64 North - Goodpaster - West Pogo | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration |
64 North - Goodpaster - South Pogo | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - Shaw | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - Eagle | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - LMS | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - Last Chance | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - East Pogo | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - Divide | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
64 North - Goodpaster - Chisna | 0.5 - 1.5% NSR | Precious Metals | Gold | Millrock Resources | Exploration | |
USA, Arizona | Copper King | 2.0% NSR, AMR & Milestone Payments | Base Metals | Copper | Kennecott Exploration Co | Exploration |
Copper Springs | 2% production and other payments | Base Metals | Copper | South32 | Exploration | |
Hardshell Skarn | 2.0% NSR & AMR Payments | Base Metals | Copper-Lead-Zinc-Silver | South32 | Exploration | |
Jasper Canyon | 2% production and other payments | Base Metals | Copper | South32 | Exploration | |
Malone | 2% production and other payments | Base Metals | Copper | South32 | Exploration | |
Parks Salyer - Sacaton | 1.5% NSR & other payments | Base Metals | Copper | Arizona Sonoran Copper | Exploration | |
Red Top | 2.5% NSR/AMR & Milestone Payments | Base Metals | Copper | Zacapa Resources | Exploration | |
Superior West | 2% NSR, AMR & Milestone Payments | Base Metals | Copper | Kennecott Exploration Co | Exploration | |
USA, Idaho | Lehman Butte | 4% NSR & other payments | Precious Metals | Gold | Hochschild Mining PLC | Exploration |
Miller Mountain | 3.5% NSR/AMR & Milestone Payments | Precious Metals | Gold | Zacapa Resources | Exploration | |
Robber Gulch | 3.25% NSR & other payments | Precious Metals | Gold | Ridgeline Exploration Corp | Exploration | |
Timber Butte | 4% NSR & other payments | Precious Metals
| Gold | Hochschild Mining PLC | Exploration | |
Valve House | 4% NSR & other payments | Precious Metals | Gold | Hochschild Mining PLC | Exploration |
Appendix A
List of Royalty Assets
LOCATION | PROPERTY | ROYALTY/PAYMENTS | COMMODITY | COMMODITY | OPERATOR | STATUS |
USA, Nevada | Brooks | 4% NSR | Precious Metals | Gold | Nevada Gold Mines | Exploration |
Cathedral Well | 2.5% NSR | Precious Metals | Gold | Ely Gold Royalties | Exploration | |
Gold Bar South - Afgan | 1% NSR | Precious Metals | Gold | McEwen Mining Inc | Advanced Royalty | |
Leeville | 1% GSR | Precious Metals | Gold | Nevada Gold Mines | Producing Royalty | |
Maggie Creek | 2% NSR on precious metals; 1% NSR on other metals | Precious Metals | Gold | Renaissance Gold Inc | Exploration | |
Maggie Creek South | 3% NSR | Precious Metals | Gold | Nevada Gold Mines | Exploration | |
NP Placers | > Of 50 cents/yd3 or 4% NSR & AAR Payments | Precious Metals | Gold | New Gold Recovery | Exploration | |
Selena | 3.25% production, AMR & Milestone Payments | Precious Metals | Gold | Ridgeline Minerals | Exploration | |
Silver Peak | 1.5% NSR | Precious Metals | Silver-Gold | Millennium Silver Corp | Exploration | |
Speed Goat | 4% NSR & other payments | Precious Metals | Gold | Hochschild Mining PLC | Exploration | |
Swift | 3.25% production, AMR & Milestone Payments | Precious Metals | Gold | Ridgeline Minerals | Exploration | |
Yerington West-Roulette | 20% carried to feasibility or 2.5% NSR | Base Metals | Copper | Hudbay Minerals | Exploration | |
USA, Oregon | Golden Ibex | 1% NSR | Precious Metals | Gold | Golden Ibex | Exploration |
USA, Utah | Copper Warrior | 2.0% NSR | Base Metals | Copper | Warrior Metals Inc | Exploration |
Ophir | 2.0% NSR | Base Metals | Copper | Kennecott Exploration Co | Exploration |
Qualified Person
Michael P. Sheehan, CPG, a Qualified Person as defined by NI 43-101 and employee of the Company, has reviewed, verified, and approved the list of EMX royalty assets.